Yesterday’s Independent on Sunday carried the news that Lib Dem MPs will this week step up the pressure on the chancellor, George Osborne, to move more quickly to raise the income tax personal allowance to £10,000. This follows Nick Clegg’s speech last month in which he called publicly for the upcoming budget to go faster than previously anticipated in implementing the policy.

As the Indy reports:

This week the Lib Dems will mount a major campaign to persuade Mr Osborne to agree to a sharp increase in the allowance. Simon Hughes, the party’s deputy leader, has urged all members and activists to back an e-petition calling for the Government to go further and faster. David Laws returns to the political front line on BBC2’s Newsnight, and Nick Clegg, the Lib Dem leader, will use a party political broadcast on Wednesday to demand “faster tax cuts funded by increasing the amount paid by the richest”.

Many will have guessed that this is one of the issues David Laws has been working on in an unofficial capacity – just look at the written Parliamentary questions he’s been asking over the last few months – given the need to fund the measure (the Independent also reported that the party has come up with £16bn worth of funding ideas, including limiting tax relief on pension contributions and a mansion tax on properties worth more than £2m).

You can catch Laws talking about the policy on tonight’s Newsnight (BBC2, 10.30pm).

10 Comments

Absolutely signed up for a tax neutral shift to benefit the average paid and the below average. The principle of progressive taxation is a cornerstone of liberal democrat thinking and we shouldn’t be shy about saying that the better and best off will be paying more.

The greatest benefit of our manifesto commitment in terms of percentage of income rise are those on the £10,000 mark, which is less than what someone working full-time on minimum wage receives as their annual income. Obviously there are part-time workers who earn less than £10,000, but earning that much still puts you in the bottom two deciles for income in the UK (which, of course, includes adults not in work such as pensioners and students).

Perpetual comment on this: the lowest paid of all (and the most vulnerable, and the most stigmatised) are the unpaid; while raising the threshold is a good thing, it mustn’t be done at the expense of people who rely on benefits.

Yes, if you express it as a percentage of income, the benefit will be greatest for the low-paid.

But the fact remains that this is a tax cut for all those who pay the basic rate of income tax, not just the “lowest paid.” And, in fact, in absolute terms all those earning more than £10000 will benefit by the same amount.

“in absolute terms all those earning more than £10000 will benefit by the same amount.”
Not quite true. Non-doms and anyone earning over £120,000 a year won’t get a penny from this. (Big deal, you may say, but this time I didn’t start the pedantry!:D)

Chris, I understood that the threshold for higher-rate tax payers is being lowered to offset the benefit of the 10k threshold rise, so higher-rate taxpayers don’t end up better off as a result of the threshold rise…

What I said was “that this is a tax cut for all those who pay the basic rate of income tax, not just the “lowest paid.” And, in fact, in absolute terms all those earning more than £10000 will benefit by the same amount.”

I hoped it was clear enough from that I wasn’t talking about higher-rate taxpayers .

The ‘Granny Tax’ was not a good move. OK it does not affect thousands who currently pay no tax at all, but it does affect thousands who have saved a moderate amount to suppliment there pension and will be retiring over the next couple of years. Their savings have already been hit very hard. The reduced ‘anticipated’ tax benefit for those who retire over the next couple of years will be a tripple wammy as they are the same group who will not be eligable for the £140 per week, because they retire just too early for that benefit. Surely it is not beyond the whit of government to avoid the cliff edges that are so unfair.

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